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Stated and revealed heterogeneous risk preferences in educational choice

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  • Fossen, Frank M.
  • Glocker, Daniela

Abstract

We develop a structural microeconometric model of educational choice with unobserved heterogeneity in risk aversion and estimate the model parameters using panel survey data. We assess the credibility of the model by linking the estimated structural parameters of risk aversion to the self-reported willingness to take risks, which is directly elicited in the survey. The risk aversion parameters revealed from educational choices decrease with the willingness to take risks stated by the survey respondents. This indicates consistency between stated and revealed risk preferences. We suggest that this method could be applied more generally to support or reject the joint validity of structural models and survey measures of preferences.

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  • Fossen, Frank M. & Glocker, Daniela, 2017. "Stated and revealed heterogeneous risk preferences in educational choice," European Economic Review, Elsevier, vol. 97(C), pages 1-25.
  • Handle: RePEc:eee:eecrev:v:97:y:2017:i:c:p:1-25
    DOI: 10.1016/j.euroecorev.2017.03.016
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    Cited by:

    1. Marc Fleurbaey & Stéphane Zuber, 2017. "Fair Utilitarianism," Documents de travail du Centre d'Economie de la Sorbonne 17005r, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Jul 2017.
    2. Hetschko, Clemens & Preuss, Malte, 2015. "Income in Jeopardy: How losing employment affects the willingness to take risks," Discussion Papers 2015/32, Free University Berlin, School of Business & Economics.
    3. Johannes S. Kunz & Kevin E. Staub, 2016. "Subjective completion beliefs and the demand for post-secondary education," Economics of Education Working Paper Series 0120, University of Zurich, Department of Business Administration (IBW).

    More about this item

    Keywords

    Educational choice; Structural model; Stated preferences; Revealed preferences; Risk aversion;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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